THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
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Friday, March 14, 2014

Consumer Sentiment…NTSM still says Sell

CONSUMER SENTIMENT DOWN SOME
(Fox News)“Consumer
sentiment dipped modestly in early March, entirely due to reduced expectations
for the future, a survey said on Friday. The
preliminary Thomson Reuters/University of Michigan overall index of consumer
sentiment fell to 79.9 in March, down from the 81.6 final reading in February.
That was below analyst expectations for a reading of 82 and the lowest level
for that index since November.” Story at…http://www.foxbusiness.com/industries/2014/03/14/consumer-sentiment-dips-in-march/

Briefing.com suggested that the
drop in sentiment was meaningless since as long as jobs keep increasing, then
there will be more spending.Summary and
charts at…

NIKKEI SUGGESTS TROUBLE FOR THE
US MARKETS (Chris Kimble posted at Advisor Perspectives)

"The prior two times the Nikkei broke down from this
pattern at resistance, in time the S&P 500 followed it…[keep] your eye on
this leading index, because continued weakness by the Nikkei could impact the
S&P 500.”Chart and commentary at…

Friday, the S&P 500 was down 0.3% to 1841 (rounded).VIX rose about 10% to 17.8.The yield on the 10-year Treasury Note remained at 2.65%.VIX was up a lot today and that’s usually not good for
the markets.Market internals remained
poor.It looks to me that we are seeing
a renewal of the correction that started 31 December at S&P 500 1848.The Index only got 2% above 1848 in the last
10-weeks and seems to have stalled with the most recent high of 1878.

As I noted yesterday, it is hard to know whether this is
just another false alarm move back to the 50-dMA at 1829 or the lower trend
line (now around 1780).The 200-dMA is 1736,
about 6% below today’s close and that is a support point.Of course anything is possible based on news
related to China’s economics or geo-politics related to Ukraine.Meaningful sanctions against Russia will be
harmful to the stock markets, as I noted earlier.

For the day, advancing stocks outpaced declining stocks
with 58% advancing.That’s a bit of a
surprise that most stocks on the NYSE were advancing while the S&P 500
declined.The majority usually wins, so
baring bad news, Monday would be expected to be an up-day.This weekend will be news-worthy with the
Crimean election.It is expected that
they will vote to join Russia so this is a story to follow.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing fell slightly
but remained at 49% at the close.(A
number below 50% for the 10-day average is generally bad news for the market.) New-highs outpaced new-lows Friday.The spread (new-highs minus new-lows was +12
. (It was +27 Thursday). The 10-day
moving average of change in the spread was minus-19. In other words, over the
last 10-days, on average, the spread has decreased by 19 each day. The 10-dMA
of up-volume continues to fall.The
internals remain negative on the market.

Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late.They are most useful when they diverge from
the Index.In 2013, using these
internals alone would have made a 16% return vs. 30% for the S&P 500 (in on
Positive out on Negative – no shorting).Of course, few trend-following systems will do well in an extreme
low-volatility, straight-up year like 2013.NTSM

The NTSM system remained SELL, Friday based on 2-indicators:
Sentiment at 80%-bulls and VIX that has been rising recently and was up another
10% or so today.Volume and Price
indicators are neutral.VIX is at its upper
trend line, so if VIX breaks higher than 18 next week it would be another clue
that this is really a correction.

MY INVESTED POSITION

Today, March 14, I reduced to 30% invested in stocks because of the NTSM
sell signal on 13 March.This is a conservative
stock allocation commensurate with the NTSM Sell signal.Leaving 30% invested hedges the bet in case
NTSM is wrong – no system is perfect.

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About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.